Following new guidelines from the industry regulator, the Financial Services Authority, the Association of British Insurers has updated its Code Of Practice for selling mortgage endowments. The FSA has told companies that they must warn policyholders of shortfalls for their mortgage endowment. In response, the ABI's new code now includes additions to the re-projection letters that are sent to policyholders.
The new letter will add a notice to consumers of the need to act on any shortfall shown. There will also be a warning box and the contact details of their adviser.
Our View
Anything that draws warnings to the attention of the consumer will be beneficial. The only problem we can see is that the warnings have come too late. Many people with mortgage endowments are so frightened to look at their statements, that they will miss the information. Whilst this may seem ridiculous, it is happening all over the country and is a human trait. People feel that putting it off until later will save them worry and money. This is not true in the case of endowment mortgages and you can do something about it, the earlier you know.
If you receive re-projection letters about your endowment and you don't understand them, contact the company for an explanation. The letters are for your benefit.